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FOS chief hits out at ‘outrageous’ insurer complaint stats

Financial Ombudsman Service chief executive Caroline Wayman has hit out at the “outrageous” uphold rates from complaints against insurers.

Speaking to the Treasury select committee yesterday, Wayman said it was wrong the FOS upheld complaints against insurers in half of cases even after firms have had the chance to put it right.

Wayman, who took the helm at the FOS in July, also said she was working hard to improve the reputation of the organisation with advisers.

She said: “Not that long ago I was at an event where an insurer was saying it is outrageous because half the cases are found for us so that means in half the cases the claims are frivolous. No, it means that we found in their favour by the time it came to us.

“I actually think it is a little bit outrageous that in a market where nothing much is happening then still in half the cases we are needing to say ‘you have done that wrong’ even after they have had the chance to put it right.

“People use the phrase ‘vexatious’, and this happens in payment protection insurance too, when what they mean is someone saying something has gone wrong and the business doesn’t agree. That is not the same as vexatious.”

She added: “For a case to be frivolous and vexatious is a pretty high bar. It is not that you don’t win, it’s that you just don’t have a case and the courts have a similar test.”

Wayman was also quizzed by TSC member and Conservative MP Mark Garnier over how the FOS is negatively seen by advisers.

When asked if it worried her, Wayman said: “Yes, because I would prefer for them not to be feeling like that and to have satisfaction. I understand some of the reasons for that and we have done various things to try and deal with it.

“There are concerns about the cost of regulation and the cost of bringing cases to us so we have increased the number of free cases to 25. It costs £550 and it used to be three so that lifts the vast majority of small businesses out of paying for cases.”

Wayman highlighted FOS roadshows where advisers could meet ombudsmen and ask them questions as an example of engagement.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Vexatious
    opportunistic
    fraudulent
    having a go
    taking a punt
    let’s see what happens
    worth a chance

    I hope she doesn’t think all of these are allowable and viable

  2. I must be more than a little thick. If it was wrong for the FOS to uphold some complaints then she presumably means in the regime of her predecessors. Otherwise if it happened under he watch why didn’t she do something about it?

    If some decisions were wrong then don’t the insurers have a case against the FOS now?

  3. “Fair and Reasonable” – to whom???

  4. She’s clearly not saying actual vexatious /opportunistic cases are viable/allowable. She’s saying it’s wrong to make out that all cases upheld for the company deserve the label vexatious as opposed to a subset, presumably a minority. And that no cases that are truly vexatious are allowable.

  5. Hands up anyone who reads the Ombudsman’s quarterly report and thinks upon reading some of the case histories about banking, credit cards or car insurance or whatever (let alone the ones published on the web) and thinks:-

    “You have got to be joking!”….

    All consumers pay the price every time an inequitable outcome is reached as the company, the industry, has to react to every injustice by adapting its rules and regulations to ensure it is not caught again or its premia/charges increase to allow for some new ‘law’ however iniquitous.

  6. Is this just really poorly written or does it make sense in a way that is beyond my comprehension?

    “Wayman said it was wrong the FOS still had uphold complaints against insurers in half of cases even after customers have had the chance to put it right.”

  7. I suspect Wayman is actually saying that she would prefer the FOS backs the insurers original decision that a complaint wasn’t justified at then outset. Her point is that the regulated firm should have got the right answer in the first place.

    My thoughts are that perhaps the insurers DID have the right answer in the first place and the FOS just rolled over in favour of the complainant….. and for that the FOS should indeed be considered ‘wrong’.

    Philip Milton hits the nail on the head.

  8. sjm 16 October 2014 11:59 am

    You have obviously missed the point and misread it as well. She clearly says “ after FIRMS have had the chance to put it right. “ How could a customer put things right ?

  9. The problem is that FOS is neither willing, nor able to consider the case properly.

    I say it is not willing because I have seen an adjudicator claim that a bond would have suffered an early surrrender penalty when the application form, which was submitted to FOS, clearly showed it would not.
    The adjudicator found against the firm.

    I say it is not able to because I have seen the same adjudicator claim that premiums paid for a whole of life policy that is in trust are not taxable gifts for IHT purposes, despite being for thousands of pounds per annum and considerably in excess of the policyholder’s income. On that occasion the finding was against the complainant.

    I am a firm advocate of a competent ombudsman scheme – but that is the key. It must be competent. These Noddy level errors show that it is not competent. You would not even have got through FPC with that kind of mistake.

    It is, Ms Wayman, “outrageous” that you do not require adjudicators and Ombudsmen to achieve the same qualfications that advisers are required to achieve. It is like employing David Blunkett as a driving test examiner!

  10. Freddie – I think you’ll find that I did neither – the article was amended after I COPIED AND PASTED their mistake.

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